Wednesday 12 February 2020 9:30 am

Softbank profit plunges 99 per cent on heavy Vision Fund losses

Softbank’s quarterly profit has been almost entirely wiped out after heavy losses from its Vision Fund hit the technology investor for the second consecutive quarter. 

The Japanese conglomerate’s operating profit from October to December plummeted 99 per cent to just ¥2.59bn (£18.2m) after its Vision Fund and a related vehicle recorded a $2bn loss.

Read more: Activist investor Elliott builds up $2.5bn stake in Softbank

Softbank blamed the profit drop on unrealised losses at the $100bn Vision Fund, which has been hit by a string of soured bets, including a substantial investment in office sharing startup Wework.

The poor results are likely to deepen concerns about founder Masayoshi Son’s ability to raise capital for a second Vision Fund. 

When he announced the launch of a successor to the fund last Summer, Son set a fundraising target of $108bn, but recent reports suggest Softbank may now only be able to raise half that amount.

Softbank’s quarterly results are the first since it emerged that activist hedge fund Elliott Management had built a stake of almost $3bn in the Japanese investment giant. 

Elliott, a New York-based fund founded by billionaire Paul Singer, is pushing the group for governance changes and a $20bn share buyback programme.

Speaking to reporters after the results were announced, Son insisted that his company was already turning a corner. “The tide is turning,” he said. 

Son said that a rally in prices at a handful of the Vision Fund’s listed investments and news yesterday that a US judge had rejected an antitrust challenge to a proposed merger of Softbank’s Sprint with T-Mobile demonstrated that the company’s fortunes were changing. 

Softbank’s shares surged 12.4 per cent yesterday following news of the judgement. 

Group profit for the quarter was ¥2.6bn, compared to ¥438bn a year earlier. The figure included a ¥332bn dilution gain related to the secondary listing of portfolio firm Alibaba. 

Read more: US executive to leave Softbank’s $100bn Vision Fund

Analysts polled by Refinitiv had expected an average of ¥345bn quarterly profit. 

The Vision Fund said it had invested $74.6bn in 88 companies by the end of December, at which time those investments were worth a total of $79.8bn.